Procedures to set up a company in Hungary

Hungary is increasingly attracting the attention of international investors, and setting up a company here offers many strategic advantages to consider. Located in the heart of Europe, Hungary enjoys a prime geographical location, facilitating access to the vast market of the European Union (EU) and serving as an important business center. In addition, a friendly business environment, attractive investment support policies, along with high-quality human resources and competitive operating costs have created an ideal investment environment. Setting up a company in Hungary is not only a decision to expand the market, optimize operational efficiency and seize outstanding growth opportunities in the current globalization context. Viet An Law would like to guide customers through the procedures for establishing a company in Hungary through the article below.

Choosing the type of company to set up a company in Hungary

The common types of companies in Hungary include the following two main types:

• Limited Liability Company (Korlátolt Felelősségű Társaság – Kft.): This is the most popular type of business in Hungary, especially suitable for small and medium-sized enterprises (SMEs). The outstanding advantage of Kft. is the limited liability of its capital contributors. This means that their liability for the company’s debts is limited to the numerical range capital to which they have contributed, protecting the personal property of members. Flexibility in management and relatively simple incorporation procedures are also factors that make Kft. an attractive choice for many investors.
• Public Joint Stock Company (Nyilvánosan Működő Részvénytársaság – Nyrt.): This form is often chosen by companies with a larger scale and a strong growth strategy. Nyrt. is an ideal choice for businesses that plan to raise significant capital from the public through the issuance of shares and listing on the stock market. The formation of a Nyrt. bringing benefits in terms of access to greater capital, improving brand reputation and creating favorable conditions for future mergers and acquisitions. However, the establishment and maintenance of a Nyrt. often comes with more complex legal and administrative requirements, as well as stricter reporting and disclosure obligations.

Apply for Investment Certificate to set up a company in Hungary

An application for an Investment Certificate usually includes the following documents:

• An application for an investment certificate;
• The detailed business plan includes the following information:
  • Describe the project, product, or service in detail.
  • Market analysis and business strategy.
  • Production or service delivery plan.
  • Financial forecasts (revenue, expenses, profit, cash flow).
  • Personnel planning and job creation projections.
  • Assess the socio-economic impacts of the project.
• Information about the investor:
  • Individual: Copy of passport.
  • Legal entity: Business registration certificate or other equivalent supporting documents.
• Proof of investment capital;

Submission: The application for an Investment Certificate will be submitted directly to the Hungarian Investment Promotion Agency (HIPA) or other competent authorities as prescribed. Details of the address and filing process will be provided on HIPA’s website.

Approval: If the project meets the criteria and is approved, you will be issued an Investment Certificate.

Company name to set up a company in Hungary

The company name must comply with the provisions of Hungarian law. Some of the regulations include:

• Uniqueness: The name must not be identical or too similar to the names of companies previously registered in Hungary.
• Language: Names are usually written in Hungarian, or names can be used in other languages but an official Hungarian translation is required.
• Restricted words: There may be restrictions on the use of certain words in the company name.

Check availability: Once you have chosen a few names, you need to check if they can be registered through the online services of the Hungarian Registration Court. If the name is registrable, you will be issued a Certificate of Company Name Approval.

Preparation of setting up a company documents in Hungary

The list of documents to be prepared includes:

• Charter of the company;
• Personal legal documents of directors;
• Documents proving the address of the registered head office in Hungary;
• Certificate of approval of the company name;

You have two options for submitting your application:

• Online filing: Use the Hungarian Registration Court’s online portal to upload and submit the required documents.
• Direct Filing: Submit the application and documents directly at the office of the Hungarian Registration Court.

Opening a bank account and contributing capital to set up a company in Hungary

Bank account opening process

• Choosing a bank: You need to choose a reputable commercial bank in Hungary. Popular banks include OTP Bank, K&H Bank, Raiffeisen Bank, etc.
• Preparation of documents:
  • The company’s business registration certificate (original or notarized copy).
  • The company’s charter (copy).
  • Information about the company’s legal representative (e.g., CEO).
  • Identity documents of the representative.
  • Other documents as required by the bank.
• Submission: The legal representative of the company will submit the application at the selected bank branch.

After opening a bank account, members or shareholders need to contribute charter capital in accordance with the law and the company’s charter.